Immigration Restrictions and Tax Cuts Are Set to Make Americans Wealthier
The Congressional Budget Office (CBO) quietly dropped some good economic news on Friday, although you wouldn’t know it from the financial press.
The nonpartisan agency now expects the economy to be larger through 2028 than it projected in January, largely thanks to the One Big Beautiful Act.
It’s not a totally smooth road to higher growth. The CBO thinks the economy will see just 1.4 percent growth in 2025, down from an earlier estimate of 1.9 percent the CBO forecast in January, as tariffs temporarily dampen consumer spending and business investment. But GDP growth is projected to reach 2.2 percent in 2026, up from the 1.8 percent in the January forecast. By 2028, GDP is expected to be about 0.1 percent higher than the earlier forecast.
The Associated Press, however, decided to report this as: “Unemployment, inflation and GDP growth will be worse this year than projected, budget office says.” They focused solely on the projected adjustment-cost slowdown this year and ignored the good news in the following year.
A detailed analysis of the CBO projections reveals even better news that, not surprisingly, the agency chose not to emphasize: the Trump administration’s immigration restrictions are set to make individual Americans meaningfully wealthier by 2028, delivering roughly $700 in additional annual income to the typical household.
The finding emerges from combining CBO’s economic and demographic projections, which show that by 2028, the U.S. economy will be slightly larger than previously expected while supporting 3.2 million fewer people. The result is a one percent boost in GDP per capita compared to the pre-policy baseline—a significant improvement that CBO relegated to scattered data tables rather than highlighting as a key economic outcome.
The Numbers Don’t Lie
The mathematics are straightforward but telling. CBO projects that by end of 2028:
- Real GDP will be 0.1 percent higher than January 2025 projections.
- Population will be 0.9 percent lower (3.2 million fewer people).
- GDP per capita will therefore be 1.0 percent higher.
For a median American household earning $70,000, that one percent translates to approximately $700 in additional annual income—equivalent to about six months of normal economic progress delivered as a permanent boost to living standards.
This represents a classic economic dividend from immigration restriction: fewer people competing for jobs, housing, and economic opportunities means existing Americans capture a larger share of national prosperity.
Timeline of American Economic Gains
The per-capita benefits build over time as immigration policies take effect:
- 2025: Initial economic headwinds as tariffs outweigh immigration effects, with GDP per capita declining slightly.
- 2026: Immigration restrictions begin reducing population growth while the reconciliation act stimulates the economy, creating a 0.3 percent per-capita gain.
- 2027-2028: Continued population constraints combined with economic stabilization deliver the full one percent per-capita dividend.
The immigration enforcement provisions driving these gains include the removal of 290,000 immigrants and voluntary departure of 30,000 others between 2026-2030, plus maintaining 50,000 in detention daily. These numbers may seem modest relative to America’s 350+ million population, but they represent the marginal changes that tip economic outcomes in favor of existing citizens.
Note that those initial economic headwinds may be exaggerated. The CBO assumes that tariffs reduce economic efficiency, but that’s likely wrong. By offsetting economic distortions created by foreign industrial and trade policy, U.S. tariffs may improve global and domestic efficiency. So, the overall economic benefit from the Trump economic package may be even greater than the CBO expects.
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Labor Market Tightening Benefits Workers
The reduced labor supply is already creating favorable conditions for American workers. Unemployment is projected to fall from 4.5 percent in late 2025 to 4.2 percent in 2026—levels that historically put upward pressure on wages as employers compete for scarce workers.
The working-age population will see the most significant changes, with 2.1 million fewer people ages 25-54 by 2035. This demographic shift represents reduced labor market competition precisely in the prime earning years when Americans are building careers and supporting families.
Despite these significant distributional effects favoring American citizens, the CBO chose to bury the per-capita analysis. The agency’s main economic report extensively details quarterly GDP fluctuations of 0.1-0.2 percentage points but fails to calculate or highlight a one percent sustained per-capita boost—an effect orders of magnitude larger than the other metrics they emphasize.
This analytical choice reflects the Washington establishment’s preference for aggregate economic measures that obscure immigration’s distributional consequences. Total GDP growth makes immigration restrictions look economically costly, while per-capita analysis reveals the benefits accruing to existing Americans.
The demographic projections were relegated to a separate technical report, requiring readers to manually combine economic and population data to calculate the per-capita effects. For most policymakers and journalists, these benefits remained effectively invisible.
Economic Realism vs. Elite Preferences
The findings vindicate the economic logic behind immigration restriction that resonates with American voters but contradicts elite economic consensus. While economists focus on total economic efficiency, workers understand intuitively that labor scarcity drives up wages and living standards.
The one percent per-capita boost demonstrates this dynamic quantitatively. It represents the economic dividend from prioritizing existing Americans’ prosperity over abstract measures of total economic output.
Consider the policy alternative: the CBO’s original projections assumed continued high immigration, producing a larger economy shared among more people. The new projections show a similar-sized economy shared among fewer people—a straightforward improvement in individual American prosperity.
The immediate per-capita gains are just the beginning of longer-term demographic shifts that will continue favoring American workers. With births projected to fall below deaths in 2031, immigration restriction accelerates the transition to a labor-scarce economy that benefits workers over employers.
This represents a fundamental reorientation from the high-immigration, high-inequality growth model that has dominated recent decades. Instead of flooding labor markets to maximize total output, the new approach prioritizes rising living standards for existing citizens.
The political implications are equally significant. These projections provide empirical validation for immigration restriction as economically beneficial policy—not despite its effects on GDP, but because of its effects on GDP per capita.
By 2028, immigration restrictions will have delivered approximately $700 in additional annual income to the typical American household compared to the high-immigration alternative. This represents real money in family budgets—enough to cover several months of groceries or utilities.
More fundamentally, it demonstrates that immigration policy is not about abstract economic efficiency but concrete distributional choices. The CBO data shows that choosing Americans over cheap foreign labor makes Americans richer. That this finding required independent analysis to uncover says more about Washington’s priorities than the underlying economic reality.
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